Executive Summary / Key Takeaways

• Resilient Franchise Model & Strategic Reinvestment: RE/MAX Holdings operates a highly cash-generative, 100% franchised model in real estate and mortgage, demonstrating consistent profitability and margin expansion for five consecutive quarters despite challenging market conditions. The company is strategically reinvesting in its value proposition and technology to drive long-term growth.
• Global Agent Growth & U.S. Stabilization: The global agent network reached an all-time high of over 147,000 agents in Q2 2025, with early signs of stabilization in the U.S. agent count, driven by new initiatives like the Aspire program and strategic conversions.
• Technological Edge & Diversified Revenue: RE/MAX is enhancing its competitive moat through advanced platforms like MAX/Tech, Lead Concierge, and the new AI-powered Max/Refer, aiming to boost agent productivity, improve customer experience, and unlock new revenue streams like the RE/MAX Media Network.
• Disciplined Financial Management: The company maintains a strong focus on operational efficiency and cost control, while prioritizing deleveraging its Total Leverage Ratio (TLR) below 3.5:1, which could enable future share repurchases.
• Outlook Amidst Uncertainty: While the macro environment tempers near-term revenue expectations, particularly for broker fees and the RE/MAX Media Network's ramp-up, the company anticipates continued agent count growth and solid Adjusted EBITDA for the remainder of 2025.

The Enduring Franchise Model in a Shifting Landscape

RE/MAX Holdings, Inc. (NYSE:RMAX) stands as a foundational pillar in the global real estate industry, built on a robust 100% franchised model since its inception in 1973. This asset-light approach, encompassing real estate brokerages under the iconic RE/MAX brand and mortgage brokerages via Motto Mortgage, yields high margins and significant cash flow. The company's core strategy centers on empowering its vast network of independent franchisees and agents through superior technology, comprehensive education, and impactful marketing.

The real estate landscape, however, is in constant flux. Persistent high mortgage rates, inflation, and broader economic uncertainties continue to challenge housing and mortgage markets in the U.S. and Canada. Despite these headwinds, RE/MAX's business model has demonstrated remarkable resilience, supporting solid top-line performance and consistent profitability. This adaptability is crucial in an industry experiencing consolidation and evolving consumer expectations.

Technological Moats and Innovation Driving Value

RE/MAX's competitive advantage is increasingly rooted in its technological differentiation and strategic innovation. The company has been actively investing in and deploying a suite of advanced tools designed to enhance agent productivity, streamline operations, and improve the overall customer experience.

The MAX/Tech platform, powered by BoldTrail, serves as a comprehensive digital ecosystem, integrating a suite of products for agents, brokers, and teams to manage and grow client relationships. This platform features a state-of-the-art user interface, AI-driven workflow tools, and actionable business insights. These tools are designed to augment recruiting activities, enhance agent productivity, and facilitate connectivity between agents and consumers. For instance, agents utilizing MAX/Tech are nearly twice as productive as those who do not, a tangible benefit that directly translates to higher transaction volumes for the network.

A key recent innovation is the Aspire program, launched in April 2025. This performance-based financial model is specifically designed to attract and develop new-to-RE/MAX agents by providing world-class education, access to the advanced technology platform, and a unique financial model that gives newer agents time to build their book of business. This program is already showing promising results, with May and June 2025 marking the first two months with a higher U.S. recruitment rate than the same period in 2024. Nearly 60% of brokerages in the U.S. and Canada have adopted Aspire, indicating strong network reception. While it may temper near-term revenue as it ramps up, at scale, the revenue per agent is expected to be on par or even better than the existing model.

Further enhancing its digital capabilities, RE/MAX launched the Lead Concierge program in Q4 2024, which delivers vetted, conversation-ready home buying and selling leads from its flagship websites, remax.com and remax.ca. This program leverages real people to contact leads within minutes, significantly increasing the chances of connection. The company also introduced an AI-powered global referral system, Max/Refer, which simplifies and scales the exchange of referrals across its unmatched global footprint of over 110 countries and territories. These innovations are strategically tapping into the power of the RE/MAX community and its network effect.

The RE/MAX Media Network, launched in Q4 2024, represents another strategic move to monetize the company's heavily trafficked digital assets through high-quality advertisements. While its ramp-up has been slower than anticipated due to the challenging macro environment impacting advertising spend, the infrastructure is in place, and it is expected to generate seven-digit annual revenue eventually. The HomeView app also enables agents to easily communicate and maintain post-sale engagement with clients, fostering long-term relationships. These technological advancements collectively strengthen RE/MAX's competitive moat by providing agents with tools that directly contribute to their productivity and profitability, fostering loyalty and attracting new talent.

Segment Performance and Financial Discipline

RE/MAX Holdings operates primarily through its Real Estate, Mortgage, and Marketing Funds segments. The company's financial performance in Q2 2025 and the first half of 2025 reflects a disciplined approach to expense management amidst a challenging revenue environment.

The Real Estate segment generated $50.8 million in revenue for Q2 2025, a 7.15% decrease from Q2 2024, and $103.3 million for the first six months of 2025, down 5.39% year-over-year. This decline was primarily due to a reduction in U.S. agent count, lower Broker fees, and reduced revenue from prior acquisitions. Despite revenue pressures, the segment's Adjusted EBITDA remained robust at $27.8 million in Q2 2025 and $48.8 million for the first half of 2025, reflecting effective cost controls. The global agent network reached a record high of over 147,000 agents, and U.S. agent count showed signs of stabilization, marking its best performance since Q2 2022. The recent conversion of RE/MAX Hawaii, adding 170 highly productive agents, further strengthens market share.

The Mortgage segment, encompassing Motto Mortgage and wemlo, faced a challenging environment, with Q2 2025 revenue at $3.6 million, a slight decrease from the prior year, and $6.8 million for the first half of 2025, down 7.41% year-over-year. Total open Motto Mortgage offices decreased 9.1% to 219. Despite these headwinds, the segment shows signs of stabilization, with management supporting operators with new tools like a pricing engine. The company remains optimistic about the long-term growth opportunity in mortgage, highlighted by a flurry of franchise renewals in FY 2024 and strong attendance at its Annual Broker and Loan Originator Conference.

The Marketing Funds segment generated $18.3 million in revenue in Q2 2025 and $37.1 million for the first half of 2025. This segment operates at no profit, with expenses directly offsetting revenue, primarily funding brand awareness campaigns and technology support for agents.

Overall, RE/MAX Holdings reported total revenue of $72.8 million in Q2 2025, a 7.3% decrease year-over-year. Revenue excluding Marketing Funds decreased 6.8% to $54.5 million, driven by 5.7% negative organic growth and 1.1% adverse foreign currency movements. Despite this, Adjusted EBITDA for Q2 2025 was $26.3 million, a 6.4% decrease, but the Adjusted EBITDA margin increased by 30 basis points to 36.1%. This consistent trend of improved margin performance for five consecutive quarters underscores the company's "better-than-expected expense management."

Competitive Positioning and Market Dynamics

RE/MAX operates in a highly competitive real estate services market. Its primary direct competitors include Anywhere Real Estate (HOUS), eXp World Holdings (EXPI), Compass, Inc. (COMP), and Redfin Corporation (RDFN).

RE/MAX's core competitive advantages are its strong brand recognition and expansive global footprint, operating in over 110 countries and territories. This network effect fosters customer loyalty, translating to higher recurring revenue from franchises. Quantitatively, RE/MAX agents at large brokerages consistently outperform competitors by a margin of more than 2:1 in productivity, averaging 11.9 transaction sides compared to 5.3 for other agents. This productivity edge is a clear differentiator, benefiting all affiliates.

Compared to Anywhere Real Estate, RE/MAX's agent-centric ecosystem and streamlined digital infrastructure lead to lower operating costs per franchise unit. While HOUS may hold a slightly larger market share, RE/MAX's recurring franchise fees generate more stable cash flow. RE/MAX's lower debt-to-equity ratio (0.06 TTM) compared to HOUS's (1.95 TTM) also indicates better financial health and agility.

Against eXp World Holdings, RE/MAX's traditional franchising model contrasts with EXPI's fully virtual approach. While EXPI offers faster digital transaction processing, RE/MAX differentiates through its established brand and customer loyalty. EXPI's net profit margin (negative TTM) and ROE (negative TTM) are inferior to RE/MAX's (3.19% and 0.02% TTM respectively), reflecting less efficient cash flow generation.

When compared to Compass and Redfin, RE/MAX generally outperforms in profitability and cash flow, as both COMP and RDFN have negative net profit margins (TTM). RE/MAX's established network leads to lower per-unit costs than these tech-intensive models. While COMP and RDFN emphasize AI-driven tools and digital-first brokerage, RE/MAX's focus on foundational technology and agent support provides a stable, efficient alternative.

RE/MAX's stance on the National Association of Realtors (NAR) Clear Cooperation Policy further defines its competitive position. The company consistently supports transparency and policies that promote listings to the broadest audience, believing this serves the best interest of buyers and sellers. This long-term view prioritizes consumer trust and professionalism over short-term gains from restrictive practices. The company is prepared to compete effectively regardless of policy changes, leveraging its strong brand and agent productivity.

Financial Health and Capital Allocation

RE/MAX Holdings maintains a strong focus on financial discipline. The company's operating cash flow was $59.65 million for the full year 2024, with free cash flow at $53.03 million. While operating cash flow decreased in H1 2025 due to higher Marketing Funds spend and employee-related liabilities, the company's ability to convert a significant portion of its earnings into cash remains a key attractive financial characteristic.

As of June 30, 2025, the Total Leverage Ratio (TLR) stood at 3.58:1, consistent with March 31, 2025. The company aims to reduce its TLR below 3.5:1, which would remove restrictions on capital allocation under its Senior Secured Credit Facility. This deleveraging is a priority, and management believes that resuming a modest level of stock repurchases is attractive given the current stock price. The $100 million share repurchase program has $62.5 million remaining. The quarterly dividend, however, remains suspended since Q4 2023 due to litigation settlements and challenging market conditions, reflecting a prudent approach to capital preservation.

Capital expenditures for 2025 are projected to be between $6.5 million and $7.5 million, primarily allocated to technology investments and leased buildings. This strategic reinvestment underscores the company's commitment to enhancing its value proposition and operational efficiencies.

Outlook and Key Risks

RE/MAX Holdings has adjusted its full-year 2025 outlook to reflect the current market realities. For Q3 2025, the company expects agent count to increase 1% to 2% year-over-year, with revenue in a range of $71 million to $76 million and Adjusted EBITDA between $23.5 million and $26.5 million. For the full year 2025, agent count is now expected to change from 0% to positive 1.5% (an increase from previous guidance), while revenue is tightened to a range of $290 million to $296 million, and Adjusted EBITDA to $90 million to $95 million (a slight reduction from previous guidance).

This revised guidance reflects management's tempered expectations for a housing rebound in the latter half of the year due to persistent macro uncertainties. The slower-than-anticipated ramp-up of the RE/MAX Media Network and near-term revenue pressure from the Aspire program, despite its success in agent recruitment, are key factors in the revenue adjustment. However, the increased agent count expectation is driven by strong international growth and early U.S. stabilization.

Key risks include ongoing litigation, particularly the appeals process for the U.S. settlement and court approval for the Canadian settlement. Unfavorable resolutions could impact financial position. The challenging housing and mortgage market conditions, characterized by high interest rates and affordability issues, remain a significant external risk. Furthermore, the company's exposure to foreign currency fluctuations, particularly with the Canadian dollar, and credit risk from franchisee receivables, though currently well-managed, warrant continued monitoring.

Conclusion

RE/MAX Holdings stands at a pivotal juncture, demonstrating remarkable resilience and strategic foresight in a dynamic real estate market. Its core investment thesis is anchored in a highly efficient, franchised business model that consistently generates strong cash flow and expanding margins. The company's proactive investments in technological differentiation, such as the Aspire program, MAX/Tech, and the RE/MAX Media Network, are designed to fortify its competitive advantages, enhance agent productivity, and unlock new revenue streams.

While near-term revenue growth faces headwinds from macro uncertainties and the slower ramp-up of new initiatives, RE/MAX's ability to stabilize U.S. agent count and achieve record global agent growth underscores the enduring strength of its brand and value proposition. The disciplined approach to financial management, including deleveraging efforts, positions the company for future capital allocation flexibility. For investors, RE/MAX represents a resilient player with a clear strategic roadmap, leveraging its foundational strengths and technological advancements to drive long-term agent growth and profitability, even as the industry continues to evolve.